The old joke goes something like this: "Don't pee in the pool," a lifeguard bellows at a swimmer. The swimmer is offended: "Everybody does it." "True," says the lifeguard, "but not from the diving board."

MK Tzachi Hanegbi climbed up to the high diving board, clutching a megaphone. He stood tall and looked about him, then lifted the megaphone and roared: "Quiet, everybody! Everybody quieten down and pay attention. I am about to cast my water into the pool. Now shut up and watch."

The indictment filed this week against Hanegbi, accusing him of dozens of political appointments, would probably never have transpired had he not made a point of turning what everybody does on the quiet into a statement.

Most officials try to play down the jobs they arrange for the boys; Hanegbi ran two ads in the Likud party paper, boasting that he was the king of political appointments.

Hanegbi is a seasoned veteran of the political and legal battlefields. One affair after another has been nipping at his heels for years, but he's always landed on his feet and forged on.

The present charges aren't the first he's faced, and he isn't about to give up his job as chairman of the Knesset Foreign Affairs and Defense Committee over them.

If ones looks at court records from similar cases, and Hanegbi's past, one realizes that there is no need to hurry to write his epitaph. The upshot has tended to be that the public's sensitivity crumbles some more, and nobody notices the difference between white, gray, pewter and black as night.

Hanegbi insisted not only on political appointments, but on flair - huge amounts of them, and brazenly. The thing is, thousands of highly-placed officials spend their days peeing into the public's pool. Some do it inside the pool while doing the breaststroke, others from the side.

One could argue over which of them do more damage, but the end result is that the pool is fouled. Wherever you turn in the public service, you find more and more crony appointments, nepotism and slime.

A few days ago, the state comptroller published astonishing figures on the extent of nepotism in government monopolies. The report attracted gasps of horror for a few minutes, and was promptly forgotten. A month ago, the comptroller published a report on political appointments at the Ministry of Industry and Trade, when Olmert was in charge there. That report ebbed within days.

In his last report, the comptroller exposed a highly intriguing appointment. At the beginning of 2004, attorney Lilach Nehemia - then, the life partner of the man who is Israel's finance minister today, Abraham Hirchson - was named deputy CEO of the Small Businesses Authority. Her appointment was made without a tender, in violation of the law, and she had no qualifications whatsoever for the job.

One would think that the parties involved would find the report highly embarrassing, but one would be wrong. It was just another report, which won headlines that nobody cares about.

The Israeli public tends to view political appointments, of cronies, friends and their friends, as a sort of gossip. They figure there's nothing to be done about it anyway, and the only question is who's involved; they are greedily curious about who advanced whose interests and why.

Nobody thinks of nepotism and cronyism as a macroeconomic disease holding back the economy. But it is a cancer that is spreading from the public sector to the private one, and preventing true development of the labor market.

A labor market crushed by cronyism has little room for incentives for excellence and achievement. The incentive to learn and advance is also low.

Every year, American magazines publish rankings of the best universities in the U.S., partly based on the average pay that their graduates achieve. Young people know they can aspire to something if they get into these universities and excel at their studies.

And here? Pay depends a lot on familial or political contacts. And everybody knows that when a mediocrity is appointed to a job, he'll appoint mediocrities to serve under him, who will then appoint even worse mediocrities under them.

"Psst. Give my kid/cousin/wife's sister-in-law's neighbor a job and I'll scratch your back too," thousands of top people in Israel whisper to one another, and the public shows no sign of caring. The courts don't know how to handle it and mediocrity and corruption strike deep roots.

Unlike interest rates, taxation, the deficit or even achievements in education, the actual damage caused by the rampant nepotism and cronyism to the labor market is hard to quantify. We become accustomed to mediocrity, inefficiency and helplessness. We don't ask how is it that in a nation so blessed with great minds and talents our results are so pathetic.